A few years ago with bills to pay and career options thin on the ground, I swallowed my ethics to take a job managing the marketing of a subprime financial company.
The business in question specialised in a product called a logbook loan.
I must admit to not really understanding the whole revolting business of subprime lending before I agreed to the interview.
I was interviewed by a chap who made his millions from lending money to the country’s poorest and the combination of his charisma and ambitious plans for the company sold me the opportunity.
I was the company’s first marketing employee and I quickly created a brand identity and a transactional website which took the customer through the whole grizzly process.
Career Choice: Family Shame
During my 5 years spent marketing in the drinks industry, my dad was always interested in what new products were coming out and I was always proud to share my achievements in the sector.
But my career choice to work in the subprime sector came as something of a shock and any pride I felt from my previous role, quickly dissipated when I shared the newly created brand website with my interested father.
“It looks great”, he said, “but you’ve made a massive mistake with the APR figure, you’ve got the decimal place in the wrong place”.
I embarrassingly said, “Actually, the APR really is 385.5%”, which was met by the most disappointed “oh, right” from my dad since I told him I killed a budgie when I was 5.
And that really was the problem with the role. My career choice had left me feeling like I was marketing with a mask like Dick Turpin, and the more customers I brought to the business the more I felt paradoxically disgusted with my success.
Despite doing well with the organisation and receiving a healthy level of remuneration; six months down the line I threw in the towel to join a travel business where I didn’t feel I would be creating the same level of consumer misery.
Although I wasn’t proud of my career choice, it was a role which fulfilled a purpose of paying the bills and I unfortunately had to park the morals at the door.
Career Choice: Wonga Wonga Wonga
That was some time ago when subprime was still in its infancy in the UK. And despite the damage that it has caused the American economy which slipped into its deepest recession since the great depression of the Thirties, subprime continues to flourish amongst low income families in the UK.
From those daytime adverts which promise to cheer up your life with a consolidation loan to pay your debt in 6000 easy monthly payments to ads which tell you to buy stuff you can’t afford and that you will only finish paying through the nose for where that said item is knackered.
But perhaps the most abhorrent of all these practices is that of the payday lenders. Like the logbook loan, there aren't currently many laws to restrict the activities of these shady businesses in the UK.
In these times of economic hardship, Wonga.com is the highest profile business of around 200 companies offering a tempting short-term loan to a low-income demographic. Having been embroiled in this seedy world myself, I know that there is a large proportion of their customers who will keep rolling there loan over, incurring large charges and getting further into debt.
I’ve seen first-hand how a £1,000 loan has quickly turned into £2,000 in the space of just six months with the company slapping on late fees, admin fees and a plethora of other spurious charges.
I’ve been out with the bailiffs to repossess a car when someone has fallen behind with their payments and watched as the vultures back in the office chuckle when that car is sold for a large profit.
But logbook loans, although tasteless and deplorable, are still a relatively small sector of the subprime market and only affect a relatively small percentage of the population.
Wonga on the other hand is taking short-term lending to an ever increasing audience. Their marketing spend has grown from approximately £22k in 2009 to a whopping £16m in 2011 according to analysts AC Nielson MMS.
They continue to plaster there cutesy ads all over prime time TV which feature the raving puppets of Betty, Earl and Joyce exclaiming the virtues of no hidden charges and the ability to pay the loan back when you want.
That’s all well and good, but that friendly lending from the old folk comes at a steep cost. For instance, borrow £316 over a 30 day period and you’ll be charged over £100 for the privilege.
Career Choice: Can Subprime continue?
Low income consumers embroiled in the use of subprime businesses are falling into a self-perpetuated debt trap which could have long term ramifications on the British economy as was demonstrated acoss the pond.
They've dragged their feet, but finally Pay day loans are the topic of a long overdue investigation for the Office of Fair Trading.
By getting involved in subprime, I felt like I'd sold my soul to the devil. But with a 2013 job market still struggling to recover from a double, some would say triple dip, recession would you move into a sector that you felt was morally unacceptable to pay the bills?
One thing is for sure, with an APR at an eye watering 4,214%, I don’t think my dad would ever speak to me again if I took over the marketing reigns at Wonga!
